From Bloomberg: "Microsoft, the world's largest software company, provides intelligence agencies with information about bugs in its popular software before it publicly releases a fix, according to two people familiar with the process. That information can be used to protect government computers and to access the computers of terrorists or military foes." The lid has officially been blown off.

If I were a foreign government, I would not trust for a second Microsoft to not have the deal in such a way that their own government--the U.S.--gets special privileges above all others. And what's stopping the U.S. from demanding that? I wouldn't trust them to give all governments a level playing field--clearly a large part of the reason for doing this (aside from security of their own systems) is to exploit other government systems. When that's the case, do you really expect them to play fair?